TMI Blog2018 (10) TMI 1847X X X X Extracts X X X X X X X X Extracts X X X X ..... he enactment of the TRAI Act. Since the Regulation made under Section 36 of the said Act is under challenge, it must first be stressed that a restrictive meaning cannot be given to the words regulation or regulate , as otherwise the very object of the Act would be stultified - under Section 36 of the TRAI Act, the Authority is empowered to carry out the purposes of the said Act as can be discerned from the Preamble to the Act. What is clear from the amended Preamble to the Act is that the interests of service providers and consumers are of paramount importance, both of which have a role to play when regulations are framed under Section 36. It is clear that only a person who is licensed under Section 5 of the Indian Wireless Telegraphy Act can use a teleport from India from which a TV channel is to be uplinked to a satellite. Equally, to be uplinked to a satellite and thereafter downlinked from such satellite to an MSO, permission would be required from the Central Government. This would be clear from a reading of the separate guidelines for uplinking and downlinking channels issued by the Government of India. The provisions of the TRAI Act have to be viewed in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived in public interest, which is to serve the interest of both broadcasters and consumers, must prevail, to the extent of any inconsistency, over the Copyright Act which is an Act which protects the property rights of broadcasters. We are, therefore, of the view that, to the extent royalties/compensation payable to the broadcasters under the Copyright Act are regulated in public interest by TRAI under the TRAI Act, the former shall give way to the latter - Appeal dismissed. - Civil Appeal Nos.7326-7327 Of 2018, 7328-7329 Of 2018 - - - Dated:- 30-10-2018 - R.F. Nariman And Navin Sinha, JJ. JUDGMENT R.F. Nariman, 1. The present civil appeals raise a challenge to certain clauses of the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017 (hereinafter referred to as the Regulation ) notified on 3.3.2017 and the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017 (hereinafter referred to as the Tariff Order ) dated 3.3.2017 made under the Telecom Regulatory Authority of India Act, 1997 (hereinafter referred to as the TRAI Act ). Since regulations made under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 90 days at a time, and (iii) can be offered only twice in a year; h. High definition and standard definition channels cannot be in the same bouquet of television channels; i. Pay channels and free to air channels cannot be in the same bouquet. 2. The Division Bench consisting of M. Sundar, J. and Chief Justice Indira Banerjee differed in their conclusions. As per M. Sundar, J., it was held:- 8(a). Owing to the narrative, discussion and all that have been set out supra, those of the impugned provisions in the said regulations and said tariff order which touch upon content of the programmes of broadcasters are liable to be struck down as not in conformity with the parent Act / plenary Act. Therefore, clauses 6(1), second proviso to 6(1), proviso to 7(2), 7(4), first proviso to 7(4) and 10(3) of the said Regulations and clauses 3(1), 3(2)(b), second proviso to 3(2)(b), first proviso to 3(3), second proviso to 3(3), third proviso to 3(3), fourth proviso to 3(3), fifth proviso to 3(3), sixth proviso to 3(3) and 3(4) of the said tariff order are struck down as not in conformity with the parent act, i.e., TRAI Act. 8(b). With regard to the other two impugned provisions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 2012 along with Section 37 was correctly dealt with. This Court is of the view that the Copyright Act has rightly taken note of being the one which gives succour to the copyright holder as against the licensee, who may also be a BRR holder. It was rightly held that the provisions deal with the protection of the right of the copyright holder. It is rather pertinent to keep in mind the discussion on the Copyright Act, 1957, which is to be seen contextually qua the issue i.e., field being occupied. This Court also does not find anything wrong with the finding given on the so called concession given by the learned counsel for the TRAI being inconsequential, as the very jurisdiction of the Act itself was taken for consideration. The finding has to be seen contextually along with the other issues including the overall stand taken in the counter affidavit of respondents 1 to 4. Similarly the self imposed restrictions while invoking the extraordinary jurisdiction under Article 226 of the Constitution of India, deserves to be concurred with. 27.2. Though a submission has been made on the decision arrived at with respect to the fixation of cap at 15% discount on the MRP of the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ster can have no quarrel. Equally, in a situation where direct to home services are provided, instead of the MSO one has persons, like, for example, TATA Sky, who then beam the signal directly to the consumer via satellite. TRAI under the TRAI Act cannot restrict pricing, bundling or packaging done by the broadcaster, as TRAI s functions kick in under the Cable Television Networks (Regulation) Act, 1995 (hereinafter referred to as the Cable TV Act ) only after the signal reaches the Cable TV operator. According to the learned Senior Advocate, at a stage anterior to the Cable TV operator beaming signals to the consumers, the broadcasters rights are not covered by the TRAI Act, which regulates only carriage, but by the Copyright Act, 1957, which regulates content. Dr. Singhvi took us through the Statement of Objects and Reasons for the TRAI Act, the Preamble thereof, and in particular Sections 2(1)(k), 11 and 36, to contend that this Act is carriage-centric , and is thus limited to regulation of service in transmission alone and does not extend to or include the subject matter or content of the transmission. The Copyright Act, on the other hand, is content-centric and deals with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which may or may not be further carried by the MSO of the Cable TV Operator. According to him, in substance, the impugned Regulation and Tariff Order went beyond the jurisdiction of TRAI under the TRAI Act in that they sought to regulate content which would mean the original work such as a book, which could then be made into a film and finally broadcast by the appellants. Anything which impinges upon the aforesaid content in terms of making, buying, packaging or marketing, including licensing and assignment, would directly be covered by the Copyright Act and would, therefore, be outside the jurisdiction of the TRAI Act. He also strongly relied upon the judgment of this Court in Petroleum and Natural Gas Regulatory Board v. Indraprastha Gas Ltd., (2015) 9 SCC 209, to state that in a parallel fact circumstance, no tariff could be fixed by the Board for the commodity in question, but only for carriage of the said commodity through pipelines. 7. Shri Rakesh Dwivedi, learned Senior Advocate appearing on behalf of TRAI, countered each of these submissions. According to the learned Senior Advocate, a reading of the TRAI Act, together with the Statement of Objects and Reasons, wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to regulate, directly or indirectly, the content of the matter contained in the television channel that is beamed. As an example, he stated that neither the Regulation nor the Tariff Order interferes with what could be beamed by the broadcaster, but only to the manner of such beaming, keeping the interest of both the broadcaster as well as the ultimate consumer in mind. He also took us through the consultation papers which preceded the draft regulation which was framed, and pointed out that most of what was contained in the impugned Regulation and Tariff Order, was either requested by the broadcasters themselves or suggested by them to safeguard their interests, which TRAI has in principle followed. What is interesting to note is that it was only at a later stage, before the draft regulation was made, that references to content and the Copyright Act were made solely as an afterthought. He also relied upon the Cable TV Act and stated that it was important to note that it was the same regulator, namely, TRAI, who had to regulate the same signal from broadcaster to MSO, MSO to Cable TV operator and Cable TV operator to consumer. It would be extremely anomalous to find that from Cable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a Regulation which balanced the interests of broadcasters and consumers. 9. Shri K.V. Vishwanathan, learned Senior Advocate appearing on behalf of the multi-system operators, placed strong reliance on Regulations 3(1) and 3(2) of the impugned Regulation, which, according to him, have not been challenged by the appellants. These regulations make it clear that the broadcasters have to offer TV channels on a non-discriminatory basis. The only reason why pricing is referred to in the impugned Regulation is to fulfil Regulation 3(2), which is to ensure that the offer made is non-discriminatory and, therefore, the Regulation and the Tariff Order read as a whole would, in fact, not impact content at all but be regulations for carriage of the signals stricto senso. He relied on judgments which held that TRAI s regulatory powers are extremely wide. He also relied upon several provisions of the Copyright Act, including Section 52(1)(b), which made it clear that there would be no infringement of copyright, assuming the arguments of the appellants to be correct, when there is transient or incidental storage of a work or performance purely in the technical process of electronic transmissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grant of licences to other agencies, including the private agencies. What is further, the electronic media is the most powerful media both because of its audiovisual impact, and its widest reach covering the section of the society where the print media does not reach. The right to use the airwaves and the content of the programmes therefore, needs regulation for balancing it and as well as to prevent monopoly of information and views relayed, which is a potential danger flowing from the concentration of the right to broadcast/telecast in the hands either of a central agency or of few private affluent broadcasters. That is why the need to have a central agency representative of all sections of the society free from control both of the Government and the dominant influential sections of the society. xxx xxx xxx 120. Hence every citizen has a right to use the best means available for the purpose. At present, electronic media, viz., T.V. and radio, is the most effective means of communication. xxx xxx xxx 122. We, therefore, hold as follows: [i] The airwaves or frequencies are a public property. Their use has to be controlled and regulated by a public authority in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the broadcasting media, the law in this country has stood still, rooted in the Telegraph Act of 1885. Except Section 4(1) and the definition of telegraph, no other provision of the Act is shown to have any relevance to broadcasting media. It is, therefore, imperative that the parliament makes a law placing the broadcasting media in the hands of a public/statutory corporate or the corporations, as the case may be. This is necessary to safeguard the interests of public and the interests of law as also to avoid uncertainty, confusion and consequent litigation. 13. Accordingly, the Government formulated a National Telecom Policy in 1994 and then decided to promulgate an ordinance which led to the enactment of the TRAI Act. The Statement of Objects and Reasons of this Act stressed: 1. In the context of the National Telecom Policy, 1994, which amongst other things, stresses on achieving the universal service, bringing the quality of telecom services to world standards, provisions of wide range of services to meet the customers demand at reasonable price, and participation of the companies registered in India in the area of basic as well as value added telecom services as also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of universal service obligations. 5. The Authority shall have an inbuilt dispute settlement mechanism including procedure to be followed in this regard as well as a scheme of punishment in the event of non-compliance of its order. 6. The Authority will have to maintain transparency while exercising its powers and functions. The powers and functions would enable the Authority to perform a role of watchdog for the telecom sector in an effective manner. 7. In order that the Authority functions in a truly independent manner and discharges its assigned responsibilities effectively, it is proposed to vest the Authority with a statutory status. 8. As the Parliament was not in session, the President promulgated the Telecom Regulatory Authority of India Ordinance, 1996 on the 27th January, 1996 for the aforesaid purpose. 9. The Bill seeks to replace the said Ordinance. (Emphasis supplied.) 14. The said Act was amended by Act 2 of 2000, which substituted the Preamble of the TRAI Act thus: An Act to provide for the establishment of the Telecom Regulatory Authority of India and the Telecom Disputes Settlement and Appellate Tribunal to regulate the telecommunication se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vements in the services provided by the service providers; (vi) type of equipment to be used by the service providers after inspection of equipment used in the network; (vii) measures for the development of telecommunication technology and any other matter relatable to telecommunication industry in general; (viii) efficient management of available spectrum; (b) discharge the following functions, namely:- (i) ensure compliance of terms and conditions of licence; (ii) notwithstanding anything contained in the terms and conditions of the licence granted before the commencement of the Telecom Regulatory Authority of India (Amendment) Act, 2000, fix the terms and conditions of inter-connectivity between the service providers; (iii) ensure technical compatibility and effective inter-connection between different service providers; (iv) regulate arrangement amongst service providers of sharing their revenue derived from providing telecommunication services; (v) lay-down the standards of quality of service to be provided by the service providers and ensure the quality of service and conduct the periodical survey of such service provided by the service providers so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration, and the Authority may, within fifteen days from the date of receipt of such reference, forward to the Central Government its recommendation after considering the reference made by that Government. After receipt of further recommendation if any, the Central Government shall take a final decision. (2) Notwithstanding anything contained in the Indian Telegraph Act, 1885 (13 of 1885), the Authority may, from time to time, by order, notify in the Official Gazette the rates at which the telecommunication services within India and outside India shall be provided under this Act including the rates at which messages shall be transmitted to any country outside India: Provided that the Authority may notify different rates for different persons or class of persons for similar telecommunication services and where different rates are fixed as aforesaid the Authority shall record the reasons therefor. (3) While discharging its functions under subsection (1), or sub-section (2) the Authority shall not act against the interest of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality. (4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablished under Sub-section (1) of Section 3 of the Act, in respect of broadcasting services and cable services, namely:- (1) Without prejudice to the provisions contained in clause (a) of sub-section (1) of section 11 of the Act, to make recommendation regarding (a) the terms and conditions on which the addressable systems shall be provided to customers. Explanation For the purposes of this clause, addressable system with its grammatical variation, means an electronic device or more than one electronic devices put in an integrated system through which signals of cable television network can be sent in encrypted or unencrypted form, which can be decoded by the device or devices at the premises of the subscriber within the limits of authorisation made, on the choice and request of such subscriber, by the cable operator for that purpose to the subscriber. (b) the parameters for regulating maximum time for advertisements in pay channels as well as other channels. (2) Without prejudice to the provisions of subsection (2) of section 11 of the Act, also to specify standard norms for, and periodicity of, revision of rates of pay channels, including interim measures. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for placing the channel in any specified position in the electronic programme guide or assigning particular channel number, such offer of discount shall not be considered a pre-condition. (4) No broadcaster shall propose, stipulate or demand for, directly or indirectly, packaging of the channel in any particular bouquet offered by the distributor of television channels to subscribers. (5) No broadcaster shall propose, stipulate or demand for, directly or indirectly, guarantee of a minimum subscriber base or a minimum subscription percentage for its channel or bouquet. Explanation: For removal of doubt, it is clarified that the subscription percentage of a channel or bouquet refers to the percentage of subscribers subscribing to a specific channel or bouquet out of average active subscriber base of a distributor. xxx xxx xxx 6. Compulsory offering of channels on a-la-carte basis. - (1) Every broadcaster shall offer all its television channels on a-la-carte basis to the distributors of television channels: Provided that the broadcaster may also offer its pay channels, in addition to offering of pay channels on a-la-carte basis, in form of bouquet: Provided furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a broadcaster under sub-regulation (3) and discounts offered under this sub-regulation in no case shall exceed thirty five percent of the maximum retail price of pay channel or bouquet of pay channels, as the case may be: Provided further that offer of discounts, if any, to distributors of television channels, shall be on the basis of fair, transparent and non-discriminatory terms: Provided also that the parameters of discounts shall be measurable and computable. (5) Every broadcaster of pay channel shall mention in its reference interconnection offer the names of persons, telephone numbers, and e-mail addresses designated to receive request for receiving interconnection from distributors of television channels and grievance redressal thereof. (6) The terms and conditions mentioned in the reference interconnection offer shall include all necessary and sufficient provisions, which make it a complete interconnection agreement on signing by other party, for distribution of television channels. (7) The Authority, suo-motu or otherwise, may examine the reference interconnection offer submitted by a broadcaster and on examination if the Authority is of the opinion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initially, at the time of signing of the interconnection agreement; and (c) the names of the corresponding states/ union territories in which such agreed areas as referred in clause (b) of this sub-regulation are located. (2) It shall be permissible to the multi-system operator to distribute the channels beyond the areas agreed under sub-regulation (1), by giving a written notice to the broadcaster, after thirty days from the date of receipt of such written notice by the broadcaster and the said notice shall deemed to be an addendum to the existing interconnection agreement: Provided that such areas fall within- (a) the registered area of operation of the multi-system operator; and (b) the states or union territories in which the multi-system operator has been permitted to distribute the signals of television channels under the interconnection agreement. (3) Nothing contained in sub-regulation (2) shall apply if written objections with reasons from the broadcaster have been received by the multisystem operator during the said thirty days notice period: Provided that any objection by the broadcaster, which is unreasonable, shall be deemed to constitute a denial of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missible for a broadcaster to offer promotional schemes on maximum retail price(s) per month of its a-la-carte pay channel(s): Provided that period of any such scheme shall not exceed ninety days at a time: Provided further that the frequency of any such scheme by the broadcaster shall not exceed twice in a calendar year: Provided further that the price(s) of a-la-carte pay channel(s) offered under any such promotional scheme shall be considered as maximum retail price(s) during the period of such promotional scheme: Provided also that the provisions of Regulations and Tariff Orders notified by the Authority shall be applicable on the price(s) of a-la-carte pay channel(s) offered under any such promotional scheme. (5) Every broadcaster, before making any change in the nature of a channel or in the maximum retail price of a pay channel or in the maximum retail price of a bouquet of pay channels or in the composition of a bouquet of pay channels, as the case may be, shall follow the provisions of all the applicable Regulations and Orders notified by the Authority, including but not limited to the publication of Reference Interconnection Offer. 4. Declaration of netw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such bouquet shall not contain both HD and SD variants of the same channel. (4) It shall be permissible for a distributor of television channels to offer bouquet(s) formed from pay channels of one or more broadcasters and declare distributor retail price(s) , per month, of such bouquet(s) payable by a subscriber: Provided that such bouquet shall not contain any pay channel for which maximum retail price per month declared by the broadcaster is more than rupees nineteen: Provided further that the distributor retail price per month of such bouquet of pay channels shall not be less than eighty five percent of the sum of distributor retail prices per month of a-la-carte pay channels and bouquet(s) of pay channels forming part of that bouquet: Provided further that the distributor retail price per month of a bouquet of pay channels offered by a distributor of television channels shall, in no case, exceed the sum of maximum retail prices per month of a-la-carte pay channels and bouquet(s) of pay channels, declared by broadcasters, forming part of that bouquet: Provided further that such bouquet shall not contain any free-to-air channel: Provided also that such bouquet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity to package a TV channel. No such restriction on broadcaster under Copyright Act. 2. Second proviso to 6(1) Bouquet of pay channels shall not have free-to-air channels. - HD and SD variant of same channel cannot be in same bouquet. Impinges upon broadcaster's ability to package a TV channel. No such restriction on broadcaster under Copyright Act. 3. Proviso to 7(2) - Bundling of third party channels prohibited. Impinges upon broadcaster's ability to package a TV channel. No such restriction on broadcaster under Copyright Act. 4. 7(4) - Broadcaster can offer discounts to distributor not exceeding 15% of MRP. Directly regulates the pricing of a TV channel, thereby also regulating pricing of individual programmes. 5. First proviso to 7(4) - Sum of discount under 7(4) and distribution fee under 7(3) shall not exceed 35% of MRP. Directly regulates the pricing of a TV channel, thereby also regulating pricing of individual programmes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - MRP of all bouquets to be uniform across distribution platforms. Under Rule 56 of the Copyright Rules, 2013, broadcaster has the right to decide separate MRP for different category of audience. 8. Fifth proviso to 3(3) - Bouquet of pay channels shall not have free-to-air channels. Impinges upon broadcaster's ability to package a TV channel. No such restriction on broadcaster under Copyright Act. 9. Sixth proviso to 3(3) - HD and SD variant of same channel cannot be in same bouquet. Impinges upon broadcaster's ability to package a TV channel. No such restriction on broadcaster under Copyright Act. 10. 3(4) - Restriction on promotion of bouquets, restriction on time, restriction on frequency. All these restrictions impinge broadcaster's ability to commercially monetize his content. 11. 4(2) - Distributor to offer all channels on a-la-carte basis. Indirectly impinges upon the broadcaster's right to offer his channels to the customers only as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer and regulation of exhibition of cinematograph. (Emphasis supplied.) 21. In BSNL v. TRAI, (2014) 3 SCC 222, this Court held: 80. After the Amendment of 2000, TRAI can either suo motu or on a request from the licensor make recommendations on the subjects enumerated in Sections 11(1)(a)(i) to (viii). Under Section 11(1)(b), TRAI is required to perform nine functions enumerated in sub-clauses (i) to (ix) thereof. In these clauses, different terms like ensure , fix , regulate and lay down have been used. The use of the term ensure implies that TRAI can issue directions on the particular subject. For effective discharge of functions under various clauses of Section 11(1)(b), TRAI can frame appropriate regulations. The term regulate contained in subclause (iv) shows that for facilitating arrangement amongst service providers for sharing their revenue derived from providing telecommunication services, TRAI can either issue directions or make regulations. xxx xxx xxx 83. In K. Ramanathan v. State of T.N. [K. Ramanathan v. State of T.N., (1985) 2 SCC 116 : 1985 SCC (Cri) 162] , this Court interpreted the word regulation appearing in Section 3(2)(d) of the Essent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has different shades of meaning and must take its colour from the context in which it is used having regard to the purpose and object of the legislation, and the Court must necessarily keep in view the mischief which the legislature seeks to remedy. 20. The question essentially is one of degree and it is impossible to fix any definite point at which regulation ends and prohibition begins. We may illustrate how different minds have differently reacted as to the meaning of the word regulate depending on the context in which it is used and the purpose and object of the legislation. In Slattery v. Naylor [(1888) LR 13 AC 446 (PC)] the question arose before the Judicial Committee of the Privy Council whether a bye-law by reason of its prohibiting internment altogether in a particular cemetery, was ultra vires because the Municipal Council had only power of regulating internments whereas the bye-law totally prohibited them in the cemetery in question, and it was said by Lord Hobhouse, delivering the judgment of the Privy Council: (AC p. 447) A rule or bye-law cannot be held as ultra vires merely because it prohibits where empowered to regulate, as regulation often involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opics specified in clauses (e) and (f) of Section 36(2) are directly referable to Sections 11(1)(b)(viii) and 11(1)(c). These are substantive functions of TRAI. However, there is nothing in the language of Section 36(2) from which it can be inferred that the provisions contained therein control the exercise of power by TRAI under Section 36(1) or that Section 36(2) restricts the scope of Section 36(1). (Emphasis supplied.) 22. However, learned counsel for the appellants relied upon Cellular Operators Assn. of India v. TRAI, (2016) 7 SCC 703 and, in particular, paragraph 41 thereof, which reads as follows: 41. We find that the impugned Regulation is not referable to Sections 11(1)(b)(i) and (v) of the Act inasmuch as it has not been made to ensure compliance with the terms and conditions of the licence nor has it been made to lay down any standard of quality of service that needs compliance. This being the case, the impugned Regulation is dehors Section 11 but cannot be said to be inconsistent with Section 11 of the Act. This Court has categorically held in BSNL [BSNL v. Telecom Regulatory Authority of India, (2014) 3 SCC 222] judgment that the power under Section 36 is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter of discussion by this Court. This Court, after construing the Act, held that where there is a cassus omissis, such lacuna cannot be filled up by the judicial interpretative process. Thus, entities which are neither common carriers nor contract carriers within the tariff regulating powers of the Board under the Act were not held amenable to regulation. Further, the reach of the Act, as is clear from a reading of Sections 20 to 22 would make it clear that transportation tariffs for common carriers and contract carriers alone could be regulated by the Board. This would naturally not include a regulation which will pertain to network tariff for city or local gas distribution network as such a network is neither a common carrier nor a contract carrier covered by the Act. Further, the laying down of the compression charge for CNG gas would also, therefore, be wholly outside the reach of the said Act. This judgment again has no application to the facts of the present case, given the fact that the Preamble read with Section 11(2) makes it clear that the Regulation and Tariff Order made thereunder would both be within the reach of TRAI under the TRAI Act. 25. At this stage, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k fit to impose. 26. Sections 2(2) and 5 of the Indian Wireless Telegraphy Act, 1933 are also set out hereinbelow: 2(2) wireless telegraphy apparatus means any apparatus, appliance, instrument or material used or capable of use in wireless communication, and includes any article determined by rule made under Section 10 to be wireless telegraphy apparatus, but does not include any such apparatus, appliance, instrument or material commonly used for other electrical purposes, unless it has been specially designed or adapted for wireless communication or forms part of some apparatus, appliance, instrument or material specially so designed or adapted, nor any article determined by rule made under Section 10 not to be wireless telegraphy apparatus; xxx xxx xxx 5. Licenses.-The telegraph authority constituted under the Indian Telegraph Act, 1885 (13 of 1885), shall be the authority competent to issue licenses to possess wireless telegraphy apparatus under this Act, and may issue licenses in such manner, on such conditions and subject to such payments as may be prescribed. 27. It is clear that only a person who is licensed under Section 5 of the Indian Wireless Telegraphy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant company shall obtain prior approval of the Ministry of Information and Broadcasting before undertaking any upgradation, expansion or any other changes in the downlinking and distribution system/network configuration. 5.6. The applicant company shall provide Satellite TV Channel signal reception decoders only to MSO/Cable Operators registered under the Cable Television Networks (Regulation) Act 1995 or to a DTH operator registered under the DTH guidelines issued by Government of India or to an Internet Protocol Television (IPTV) Service Provider duly permitted under their existing Telecom License or authorized by Department of Telecommunications or to a HITS operator duly permitted under the policy guidelines for HITS operators issued by Ministry of Information and Broadcasting, Government of India to provide such service. 5.7. The applicant company shall ensure that any of its channels, which is unregistered or prohibited from being telecast or transmitted or re-transmitted in India, under the Cable Television Networks (Regulation) Act 1995 or the DTH guidelines or any other law for the time being in force, cannot be received in India through encryption or any othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in this regard. 30. We are of the view that the provisions of the TRAI Act have to be viewed in the light of protection of the interests of both service providers and consumers. This being so, it is clear that no constricted meaning can be given to the provisions of this Act. It is important to remember that under Section 11(1)(a)(iv), one of the functions of the Authority, though recommendatory, is to facilitate competition and promote efficiency in the operation of telecommunication services (which includes broadcasting services) so as to facilitate growth in such services. What is also clear from Section 11(1)(b), is that terms and conditions of interconnectivity between different service providers have to be fixed, which necessarily includes terms that relate not only to carriage simpliciter as submitted by Dr. Singhvi, but to all terms and conditions of interconnectivity between broadcaster, MSO, Cable TV operator and the ultimate consumer, so as to ensure that the object of the Act is carried out, namely, that both broadcasters and consumers get a fair deal. Towards this end, Section 11(2) makes it clear that the Authority may, from time to time, notify the rates at wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d even conduct periodical survey to ensure proper implementation. 32. We must also hasten to add that the power under Section 36(1) of the Act is very wide and not constricted by the provisions of Section 11, as was held in BSNL v. TRAI (supra.). 33. Equally, in Hotel Restaurant Assn. v. Star India (P) Ltd., (2006) 13 SCC 753, this Court has held:- 24. Section 11 of the TRAI Act provides for the functions of TRAI. Clause (a) of sub-section (1) of Section 11 of the TRAI Act empowers TRAI to make recommendations either suo motu or on the request from the licensor, on the matters enumerated therein. Clause (b) thereof empowers it inter alia to fix the terms and conditions of interconnectivity between the service providers. 25. Sub-section (2) of Section 11 of the TRAI Act contains a non obstante clause providing that TRAI may frame from time to time by order(s) notified in the Official Gazette the rates at which the telecommunication services within India and outside India shall be provided under the said Act including the rates at which messages shall be transmitted to any country outside India. Proviso appended to subsection (2) thereof empowers TRAI to notify differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hannels. If the channel values are allowed to be corrected basis consumer demand the share of the channel in the ARPUs shall be realigned to reflect their true value proposition without leading to any arbitrary or perverse price hikes. Further the proposed discount cap will effectively eliminate pricing distortions. However, in the interest of enabling a smooth and seamless transition to full addressability without creating any unnecessary chaos we are proposing the following caps, in the transition phase. Any lower cap will not only stifle investments in innovative content but also continue to restrict incumbent channels whose rates were frozen in 2003-2004 from realizing their real value. Mass Genre Proposed Price Cap (Rs.) General Entertainment (Hindi Regional) 12.00 Movies (Hindi Regional) 10.00 Sports 18.00 These caps should be subject to automatic annual revision, basis inflation. While answering whether broadcasters should offer wholesale discounts to distribution platform operators (hereinafter r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t HD channels should adhere to twin conditions and discounting caps at the wholesale and retail. - Discount on wholesale prices should be capped at 33% to ensure a viable a-la-carte fallback option for DPOs. - Retail a-la-carte prices should be linked to wholesale prices (same linkage multiplier as used for SD channels). - Discount at retail level also to be limited to 33% to ensure a viable a-la-carte fallback option for consumer. 3. Bundling of HD and SD channels should not be allowed, both at wholesale and retail levels. 4. Charging of access fee for HD channels should not be allowed at retail level. 5. DPOs free to sell HD channels as a-la-carte as well as bouquet(s) of HD channels. 6. Consumers and DPOs should have a choice to subscribe to only HD channels or only SD channels or both combined but purchased separately. Equally, insofar as whether free to air and pay channel bouquets are concerned, Star India itself stated that they should not be bundled together thus:- FTA and Pay channels should not be bundled together - As has been highlighted in the Preamble, we believe that FTA channels should be free to consumer. - Pay and FTA channels sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Bouquets formed by the broadcasters contain only few popular channels. The distributors of television channels are often asked to take the entire bouquet as otherwise they are denied the popular channels altogether or given such popular channels at RIO rates. To make the matters worse, the distributors of television channels have to pay as if all the channels in the bouquet are being watched by the entire subscriber base, when in fact only the popular channels will have high viewership. In such a scenario, at the retail end, the distributors of television channels somehow push these channels to maximum number of subscribers so as to recover costs. This marketing strategy based on bouquets essentially results in perverse pricing of bouquets vis- -vis the individual channels. As a result, the customers are forced to subscribe to bouquets rather than subscribing to a-la-carte channels of their choice. Thus, in the process, the public, in general, end up paying for unwanted channels and this, in effect, restricts subscriber choice. Bundling of large number of unwanted channels in bouquets also result in artificial occupation of distributors' network capacity. This acts as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher ceilings were prescribed to give flexibility to broadcasters to monetise their channels and freedom to do business. Further, different channels even in the same genre may have varying cost of production and potential to monetise, but within the framework. A broadcaster may price even nondriver channels at a much higher value that they can command. Non-discovery of reasonable price of a channel in a market is one of the constraints that can be manipulated and misused to price a channel in a-la-carte from which is illusionary. Such high ala-carte prices permits broadcasters/distributors to provide high discounts to push non-drivers channels in form of bouquets to the subscribers while reducing the probability of choosing the a-la-carte channels of choice as required by the lawmakers in the Parliament. The possibility to forcing bouquets over a-la-carte choice by using higher discounts can be further understood by following example, where a broadcaster has a total of 35 pay channels out of which only 5 are driver channels: Channel Discount 75% Discount 60% Discount 45% Discount 30% D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eby encouraging a subscriber to choose a-la-carte channels of his choice. 67. In the present regulatory framework incidences have come to the knowledge where discount upto 90% on the declared RIO prices has been given by broadcasters. Obviously such efforts kill competition and reduce a-la-carte choice which is antisubscriber. Accordingly, the Authority has prescribed a discount of 15% to be provided by broadcasters at wholesale level and further 15% to be provided by distributors at retail level. The net effect to subscribers at retail level will be a discount of approximately 30% on the bouquets of channels. Therefore flexibility of formation of bouquet has been given to broadcasters and MSOs both to such an extent that total permissible discount does not kill the a-la-carte choice. The Authority has been careful in prescribing a framework which does not encourage non-driver channel to be pushed to subscribers against their choice. Non-driver channels which are provided as part of bouquets not only kill choice of the ala-carte channels but also eat away the channel carrying capacity available with distributors which may result in artificial capacity constraints at distribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stake holders and consumers, pursuant to which most of the suggestions given by the broadcasters themselves have been accepted and incorporated into the Regulation and the Tariff Order. The Explanatory Memorandum shows that the focus of the Authority has always been the provision of a level playing field to both broadcaster and subscriber. For example, when high discounts are offered for bouquets that are offered by the broadcasters, the effect is that subscribers are forced to take bouquets only, as the a-lacarte rates of the pay channels that are found in these bouquets are much higher. This results in perverse pricing of bouquets vis- -vis individual pay channels. In the process, the public ends up paying for unwanted channels, thereby blocking newer and better TV channels and restricting subscribers choice. It is for this reason that discounts are capped. While doing so, however, full flexibility has been given to broadcasters to declare the prices of their pay channels on an a-la-carte basis. The Authority has shown that it does not encroach upon the freedom of broadcasters to arrange their business as they choose. Also, when such discounts are limited, a subscriber can then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The following are certain relevant terms as defined under the Sports Act: 2.(1)(a) broadcaster means any person who provides a content broadcasting service and includes a broadcasting network service provider when he manages and operates his own television or radio channel service; (b) broadcasting means assembling and programming any form of communication content, like signs, signals, writing, pictures, images and sounds, and either placing it in the electronic form on electro-magnetic waves on specified frequencies and transmitting it through space or cables to make it continuously available on the carrier waves, or continuously streaming it in digital data form on the computer networks, so as to be accessible to single or multiple users through receiving devices either directly or indirectly; and all its grammatical variations and cognate expressions; (c) broadcasting service means assembling, programming and placing communication content in electronic form on the electro-magnetic waves on specified frequencies and transmitting it continuously through broadcasting network or networks so as to enable all or any of the multiple users to access it by connecting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estrial networks and Direct-to-Home networks in such manner and on such terms and conditions as may be specified. (2) The terms and conditions under sub-section (1) shall also provide that the advertisement revenue sharing between the content rights owner or holder and the Prasar Bharati shall be in the ratio of not less than 75:25 in case of television coverage and 50:50 in case of radio coverage. (3) The Central Government may specify a percentage of the revenue received by the Prasar Bharati under sub-section (2), which shall be utilised by the Prasar Bharati for broadcasting other sporting events. xxx xxx xxx 5. Power of the Central Government to issue Guidelines.-The Central Government shall take all such measures, as it deems fit or expedient, by way of issuing Guidelines for mandatory sharing of broadcasting signals with Prasar Bharati relating to sporting events of national importance: Provided that the Guidelines issued before the promulgation of the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Ordinance, 2007 (Ord. 4 of 2007) shall be deemed to have been issued validly under the provision of this section. 40. Shri Dwivedi is therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice tier on a la carte basis to the subscriber at a tariff specified under this subsection. (4) The Central Government or the Authority may specify in the notification referred to in sub-section (3), the number of free-to-air channels to be included in the package of channels forming basic service tier for the purposes of that sub-section and different numbers may be specified for different States, cities, towns or areas, as the case may be. xxx xxx xxx Explanation.-For the purposes of this section- (a) addressable system means an electronic device (which includes hardware and its associated software) or more than one electronic device put in an integrated system through which signals of cable television network can be sent in encrypted form, which can be decoded by the device or devices, having an activated Conditional Access System at the premises of the subscriber within the limits of authorisation made, through the Conditional Access System and the subscriber management system, on the explicit choice and request of such subscriber, by the cable operator to the subscriber; (b) basic service tier means a package of free-to-air channels to be offered by a cabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (f) Contains anything amounting to contempt of court; (g) Contains aspersions against the integrity of the President and Judiciary; (h) Contains anything affecting the integrity of the Nation; (i) Criticises, maligns or slanders any individual in person or certain groups, segments of social, public and moral life of the country ; (j) Encourages superstition or blind belief; (k) Denigrates women through the depiction in any manner of the figure of a women, her form or body or any part thereof in such a way as to have the effect of being indecent, or derogatory to women, or is likely to deprave, corrupt or injure the public morality or morals; (l) Denigrates children; (m) Contains visuals or words which reflect a slandering, ironical and snobbish attitude in the portrayal of certain ethnic, linguistic and regional groups; (n) Contravenes the provisions of the Cinematograph Act, 1952. (o) is not suitable for unrestricted public exhibition Provided that no film or film song or film promo or film trailer or music video or music albums or their promos, whether produced in India or abroad, shall be carried through cable service unless it has been certified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inghvi and Mr. Chidambaram were also by copious reference to the Copyright Act, 1957, which, according to them, showed that once the Copyright Act steps in, TRAI must necessarily step out. They referred to certain provisions of this Act stage-wise. The Copyright Act, 1957 as originally enacted stated in its Objects and Reasons that: it is necessary to enact an independent self-contained law on the subject of copyright in the light of growing public consciousness of the rights and obligations of authors and in the light of experience gained in the working of the existing law during the last forty years. New and advanced means of communications like broadcasting, litho-photography, etc., also call for certain amendments in the existing law , as a result of which certain rights akin to copyright are conferred on broadcasting authorities in respect of programmes broadcast by them. In this Act, as originally enacted, Section 2(v) defined radio-diffusion as follows: 2(v). radio-diffusion includes communication to the public by any means of wireless diffusions whether in the form of sounds or visual images or both. 45. Section 37, as originally enacted, recognised a broadcast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the public as follows: 2(ff) communication to the public means communication to the public in whatever manner, including communication through satellite. 50. Consequently, Section 37 was also amended so as to replace the expression radio-diffusion with the expression broadcast . 51. In 1994, consequent to treaty obligations imposed upon India, broadcast reproduction rights were expanded to include private broadcasting organisations. The Statement of Objects and Reasons for the aforesaid amendment made it clear that: The law relating to copyright and related rights has been under comprehensive review of the Government for some time, taking into account the difficulties expressed by different groups of copyright owners and others, the experience gained from the administration of the existing law and the situation created by various technological developments that have taken place. 2. The Copyright Act, 1957 amended and consolidated the law relating to copyright in India. It was further amended by the Copyright (Amendment) Acts of 1983 and 1984 and certain improvements were effected. By the Copyright (Amendment) Act, 1992 the term of copyright was fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose not envisaged by such licence; or (e) sells or hires to the public, or offers for such sale or hire, any such sound recording or visual recording referred to in clause (c) or clause (d), shall, subject to the provisions of section 39, be deemed to have infringed the broadcast reproduction right. 54. Section 38 was substituted with a new Section 39A as follows: 39A. Other provisions applying to broadcast reproduction right and performer s right. (1) Sections 18, 19, 30, 53, 55, 58, 64, 65 and 66 shall, with any necessary adaptations and modifications, apply in relation to the broadcast reproduction right in any broadcast and the performers right in any performance as they apply in relation to copyright in a work: xxx xxx xxx 55. Sections 33 and 33A, which have been relied upon by the learned counsel for the appellants, read as follows: 33. Registration of copyright society.- (1) No person or association of persons shall, after coming into force of the Copyright (Amendment) Act, 1994 commence or, carry on the business of issuing or granting licences in respect of any work in which copyright subsists or in respect of any other rights conferred by this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right society being shared with the authors of works in their capacity as owners of copyright or of the right to receive royalty: Provided further that every copyright society already registered before the coming into force of the Copyright (Amendment) Act, 2012 shall get itself registered under this Chapter within a period of one year from the date of commencement of the Copyright (Amendment) Act, 2012. (4) The Central Government may, if it is satisfied that a copyright society is being managed in a manner detrimental to the interest of the authors and other owners of right concerned, cancel the registration of such society after such inquiry as may be prescribed. (5) If the Central Government is of the opinion that in the interest of the authors and other owners of right concerned or for non-compliance of Section 33-A, sub-section (3) of Section 35 and Section 36 or any change carried out in the instrument by which the copyright society is established or incorporated and registered by the Central Government without prior notice to it, it is necessary so to do, it may, by order, suspend the registration of such society pending inquiry for such period not exceeding one yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 984, 1992, 1994 and 1999. The 1994 amendment was a major one which harmonized the provisions of the Act with the Rome Convention, 1961 by providing protection to the rights of performers, producers of phonographs and broadcasting organizations. It also introduced the concept of registration of Copyright Societies for collective management of the rights in each category of copyrighted works. The last amendment in 1999 introduced a few minor changes to copy with the obligations under the Trade Related Aspects of Intellectual Property Rights (TRIPS). 2. The Act is now proposed to be amended with the object of making certain changes for clarity, to remove operational difficulties and also to address certain newer issues that have emerged in the context of digital technologies and the Internet. The two World Intellectual Property Organisation (WIPO) Internet Treaties, namely, WIPO Copyright Treaty (WCT), 1996 and WIPO Performances and Phonograms Treaty (WPPT), 1996 have set the international standards in these spheres. The WCT and the WPPT were negotiated in 1996 to address the challenges posed to the protection of Copyrights and Related Rights by digital technology, particularly wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 59. Certain amendments were made to Section 37(3)(e). Section 39A was amended to extend the provisions of Sections 33 and 33A to owners of the broadcast reproduction rights as follows:- 39A. Other provisions applying to broadcast reproduction right and performer s right. (1) Sections 18, 19, 30, 30A, 33, 33A, 34, 35, 36, 53, 55, 58, 63, 64, 65, 65A, 65B and 66 shall, with any necessary adaptations and modifications, apply in relation to the broadcast reproduction right in any broadcast and the performers right in any performance as they apply in relation to copyright in a work. xxx xxx xxx 60. A reading of the aforesaid provisions, according to the learned Senior Advocates for the appellants, makes it clear that broadcasters may, in fact, be the owners of the original copyright of a work for example, if they themselves have produced a serial. They may also be the copyright owners of the broadcast of this serial which is a separate right under the Copyright Act which they are able to exploit, and if there is a rebroadcast of what has already been copyrighted, this again is protected by Chapter VIII of the Copyright Act. The argument, therefore, is that content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with royalty . In the context of the Act, royalty is a genus and compensation is a species. Where a licence has to be granted, it has to be for a period. A compensation may be paid by way of annuity. A compensation may be held to be payable on a periodical basis, as apart from the compensation, other terms and conditions can also be imposed. The compensation must be directed to be paid with certain other terms and conditions which may be imposed. 61. Rule 56 of the Copyright Rules, 2013, also relied upon, is set out hereunder: 56. Tariff Scheme.- (1) As soon as may be, but in no case later than three months from the date on which a copyright society has become entitled to commence its copyright business, it shall frame a scheme of tariff to be called the Tariff Scheme under section 33A of the Act setting out the nature and quantum of royalties which it proposes to collect in respect of the right or the set of rights in the specific categories of works administered by it. (2) Every copyright society shall display its Tariff Scheme by posting it on its website. (3) The Tariff Scheme shall indicate the separate rates for- (a) different categories of users; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cognate expressions shall be construed accordingly; 63. When the definitions of broadcast in Section 2(dd) of the Copyright Act and of broadcasting services in Clause 2(j) of the impugned Regulation are compared, what is clear is that the words intended to be received by the general public either directly or indirectly are completely missing from the definition of broadcast contained in the Copyright Act. Also, Section 52(1)(b) of the Copyright Act indicates that transient or incidental storage of a work or performance purely in the technical process of electronic transmission or communication to the public is not an act that would constitute infringement of copyright. Section 52(1)(b) reads as follows: 52. Certain acts not to be infringement of copright.- (1) The following acts shall no constitute an infringement of copyright, namely:- xxx xxx xxx (b) the transient or incidental storage of a work or performance purely in the technical process of electronic transmission or communication to the public; 64. The picture that, therefore, emerges is that copyright is meant to protect the proprietary interest of the owner, which in the present case is a bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll, in substance, impinge upon any of these rights, but merely acts, as has been stated hereinabove, as a regulator, in the public interest, of broadcasting services provided by broadcasters and availed of by the ultimate consumer. 65. As Dr. Singhvi has repeatedly stressed that fixation of rates under Section 11(2) would directly impinge upon compensation payable for copyright to the broadcasters, it is important to note that both the Copyright Act as well as the TRAI Act are central enactments which do not expressly provide that the one overrides the other. In this situation, a basic principle of interpretation of statutes is that both Acts be harmonized in the event of any clash/conflict between the two so that both may be given effect to. In fact, Section 38 of the TRAI Act reads as under:- 38. Application of certain laws. The provisions of this Act shall be in addition to the provisions of the Indian Telegraph Act, 1885 (13 of 1885) and the Indian Wireless Telegraphy Act, 1933 (17 of 1933) and, in particular, nothing in this Act shall affect any jurisdiction, powers and functions required to be exercised or performed by the Telegraph Authority in relation to any area ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
